US giving Canada cold shoulder on Pacific trade pact

Last March, Canada wrote to Trans-Pacific Partnership (TPP) members in a bid to seek a seat at the table. Lobbying has been intense. Canada’s chief TPP negotiator David Plunkett travelled to Lima in August, Washington in September and this week he and his team are in Brunei.

Yet Canada is still outside the tent trying to look in. Canada has support from all the current members of the TPP except for the U.S. and New Zealand – and New Zealand’s opposition is half-hearted. Canada is still waiting patiently. The situation is not due to any lack of effort or competence on Canada’s part.

Canada has excellent, experienced negotiators who are highly respected around the world. They are ably supported by energetic, enthusiastic and bright officials. They will be able to advance and defend Canadian interests. Canada understands how important participation in the TPP could be, but it must make an informed decision based on what can be gained and at what cost.

The real reason is that the U.S. is the gatekeeper and Washington appears determined to keep Canada out of these talks that include not only New Zealand and the U.S. but also Australia, Brunei Darussalam, Chile, Peru, Singapore, Vietnam and now Malaysia.

The U.S. has suggested that Canada is not prepared to sign on to negotiating a high quality, comprehensive deal, and has rather hypocritically beat the drum about the need for improved U.S. access for its dairy and poultry products in Canada.

Little publicity has been given to U.S. demands for changes in Canadian intellectual property protection, investment policy – and, of course, trade and cultural products. We can be certain that the U.S. will resurrect and flog the items from its NAFTA and CUSTA shopping lists it did not get earlier. Remember border broadcasting and simulcasting of commercials. The issues are not dead – just in suspended animation.

Washington is never shy about looking after its interests before, during and after negotiations. It is pre-negotiating, looking for concessions in advance, and will ensure that others pay to play.

Are U.S. demands for greater dairy access real? In recent discussions within TPP on market access, Washington has protected both its dairy and sugar industries from such demands. This should not be seen as surprising for a country whose legislators consider consistency to be the bugbear of small minds.

The U.S. National Milk Producers Federation told United States Trade Representative Ron Kirk that “the heightened prospect of greater exploitation by New Zealand of not only global markets, but also our domestic industry and policy, would make an already uneven playing field in the global markets worse,” and “will drive down dairy farmer income in America, force farms out of business, and create a ripple effect on dairy plants and other rural businesses.”

This comes from the very heavily-subsidized U.S. dairy industry – more than $5 billion a year in direct support. NMPF has strong Congressional support. Indeed, the Congressional Dairy Caucus told Ambassador Kirk the U.S. could participate fully in the TPP – but not to touch dairy. So much for New Zealand’s hopes for better access for its dairy exports.

Enhanced Canadian protection of intellectual property is a very real objective for the U.S. Canada is changing its legislation to conform with World Intellectual Property Organization norms – but apparently not as far and as fast as the U.S. would like.

Trade negotiations are about innumerable details and the particular problems of each participant. And all countries, even the largest, have sensitive issues and concerns.

Each party in the TPP has thousands of their own tariff lines and regulatory measures in play. All TPP participants will have problems and special concerns which will need to be accommodated. Discussions about harmonization of innumerable regulations and ensuring all participants can in fact meet their new obligations are time consuming and require total attention to detail.

New Zealand has protected its Kiwifruit Marketing Board (ZESPRI) in the Doha Round at the same time setting up a potential sell-out of the Canada Wheat Board. New Zealand will not sacrifice ZESPRI on the altar of the TPP.

If renegotiating any part of NAFTA is a pre-condition for a seat at the table in the TPP talks, this will not make the deal more attractive to Canada. No wonder Canada’s Trade Minister Peter Van Loan has been hot and cold on participation. The Minister was quite cagey on the existence of the March letter to other participants until a leading U.S. newsletter got a copy.

The U.S. clearly wants to control and shape the TPP their way and to treat the TPP as a hub-and-spoke exercise, negotiating with current TPP participants on the basis of a series of bilateral negotiations. Australia and New Zealand support a broader plurilateral approach on market access. So would Canada.

We believe that the U.S. does not expect Canada to deal with the issues on its list. Washington’s real agenda is to keep Canada out of the process. The U.S. does not want Canada joining forces with Australia and New Zealand, nor to galvanize the other players to isolate Washington in its efforts to impose a one-sided deal.

The hidden American agenda is to gerrymander a deal which will be opened later on a take-it-or-leave-it basis for Canada and others who will include China and Japan. They are not likely to buy into a made-in-Washington deal which doesn’t reflect their own concerns and ambitions. That is even less likely to happen than concluding the Doha Round in 2012. And the Obama Administration will miss its APEC 2011 opportunity to show international trade leadership because real leadership and unenlightened greed do not mix.

Peter Clark is a former Canadian trade negotiator and and international trade consultant. He is a regular contributor to iPolitics.ca

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Peter Clark is one of Canada’s leading international trade strategists. His clients, in Canada and around the world, include governments, corporations and trade associations. He is a frequent media commentator and columnist for iPolitics.